Note 5 - Derivative Financial Instruments

9 Months Ended

Jan. 26, 2019

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

5

.

DERIVATIVE FINANCIAL INSTRUMENTS

From time to time, we enter into aluminum swap contracts to partially mitigate our exposure to changes in the cost of aluminum cans. Such financial instruments are designated and accounted for as a cash flow hedge. Accordingly, gains or losses attributable to the effective portion of the cash flow hedge are reported in Accumulated Other Comprehensive Income (Loss) (“AOCI”) and reclassified into cost of sales in the period in which the hedged transaction affects earnings. The ineffective portion of the change in fair value of our cash flow hedge was immaterial. The following summarizes the gains (losses) recognized in the Consolidated Statements of Income and AOCI relative to the cash flow hedge for the

three

and

nine

months ended

January 26, 2019

and

January 27, 2018:

	(In thousands)
	Three Months Ended					Nine Months Ended
	2019			2018		2019			2018
Recognized in AOCI:
(Loss) gain before income taxes	$	(1,937	)	$	2,067	$	5,487		$	6,623
Less income tax (benefit) provision		(463	)		731		1,313			2,421
Net	$	(1,474	)	$	1,336	$	4,174		$	4,202
Reclassified from AOCI to cost of sales:
(Loss) gain before income taxes	$	(305	)	$	844	$	13,225		$	1,237
Less income tax (benefit) provision		(73	)		289		3,053			435
Net	$	(232	)	$	555	$	10,172		$	802
Reclassified tax effects to provision for income taxes	$	0		$	515	$	0		$	515
Net change to AOCI	$	(1,242	)	$	1,296	$	(5,998	)	$	3,915

As of

January 26, 2019,

the notional amount of our outstanding aluminum swap contracts was

$57.6

million and, assuming

no

change in commodity prices,

$1.6

million of unrealized loss before tax will be reclassified from AOCI and recognized in earnings over the next

12

months. See Note

1.

As of

January 26, 2019,

the fair value of the derivative liability was

$1.5

million which was included in accrued liabilities. At

April 28, 2018,

the fair value of the derivative asset was

$6.2

million, which was included in prepaid and other assets. Such valuation does

not

entail a significant amount of judgment and the inputs that are significant to the fair value measurement are Level

2

as defined by the fair value hierarchy as they are observable market based inputs or unobservable inputs that are corroborated by market data.